If a tax is placed on tires, then i. the equilibrium quantity of tires will decrease.
Ii. a deadweight loss will be created.
Iii. the producer surplus will decrease.
A)i only
B)ii only
C)i and iii
D)i and ii
E)i, ii, and iii

Question

Quizplus · Accepted Answer

A tax on tires will decrease the equilibrium quantity due to higher prices, create a deadweight loss as the market becomes less efficient, and reduce producer surplus as producers receive less revenue.

If a Tax Is Placed on Tires, Then I